The naira slid to N1,359 per dollar on Tuesday after the Central Bank of Nigeria (CBN) announced a 50 basis points interest rate cut at the conclusion of its 304th Monetary Policy Committee (MPC) meeting. The currency weakened from N1,353.5/$ recorded a day earlier, reflecting mild pressure in the official foreign exchange market as investors assessed the implications of the policy shift.
At the meeting, the CBN reduced the Monetary Policy Rate (MPR) from 27 percent to 26.5 percent, marking a cautious pivot toward monetary easing after months of aggressive tightening. Despite the rate cut, other key policy parameters were left unchanged. The MPC retained the Cash Reserve Ratio at 45 percent for commercial banks and 16 percent for merchant banks, maintained the Liquidity Ratio at 30 percent, and kept the Standing Facilities Corridor at +50/-450 basis points around the MPR.
Market data showed that the slight depreciation came even as macroeconomic indicators point to improving fundamentals. Headline inflation declined for the eleventh consecutive month to 15.1 percent in January 2026, suggesting price pressures are gradually easing. Analysts say the mixed signals — easing inflation but lower interest rates — may have prompted cautious reactions from foreign exchange traders.
CBN Governor Olayemi Cardoso disclosed that Nigeria’s gross external reserves rose to $50.45 billion as of February 16, 2026 — the highest level in 13 years. He described the external sector’s performance as “remarkable,” adding that sustained market confidence remains central to the stability of the foreign exchange framework. “Without market confidence, no matter what you do, you will significantly suboptimise,” Cardoso said.
The naira’s latest movement contrasts with reactions after previous MPC meetings, where the currency recorded mixed performances depending on liquidity conditions and investor expectations. While earlier meetings saw temporary appreciation, others triggered declines, underscoring how exchange rate dynamics extend beyond interest rate decisions alone. For businesses and households already grappling with price adjustments, the latest shift reinforces how closely Nigeria’s economic outlook remains tied to monetary policy direction and investor sentiment.
source: nairametrics